There wasn't much unexpected news in these results, hence furniture retailer DFS's (DFS) shares didn't move dramatically on the day these numbers hit the market. But that doesn't mean there weren't some good headlines. Gross sales rose by a solid 7 per cent, helped by increased contributions from satellite brands Dwell and Sofa Workshop. That, along with actions taken to protect gross margins, pushed gross profits up 4 per cent to £53.5m.
A similar improvement in cash profits led the group to confirm a special dividend worth 9.5p a share. Adding that to Numis's expected 11.3p in regular dividends for the full year gives a forward yield of 8 per cent, partly elevated by the weakened share price.
The group's profitability has been dented by the recent devaluation in sterling, which has driven up import costs; DFS wants to stick to competitive prices rather than pass costs on. In order to keep margins as robust as possible, management is continually renegotiating with suppliers, managing the scale of operations and relying more on its own UK manufacturing capabilities.
Due to a tougher expected second half, analysts at Numis forecast adjusted pre-tax profits of £64m and 23.6p in the year to July 2017 (down from £66.7m and 24.3p in FY2016).
DFS FURNITURE (DFS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 251p | MARKET VALUE: | £531m | |
| TOUCH: | 251-253p | 12-MONTH HIGH: | 330p | LOW: 177p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 118p* | NET DEBT: | 54% | |
| Half-year to 30 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 356 | 16.2 | 10.6 | 3.50 |
| 2017 | 380 | 16.7 | 6.2 | 3.70** |
| % change | +7 | +3 | -42 | +6 |
Ex-div: 1 Jun Payment: 21 Jun *Includes intangible assets of £492m, or 233p a share **Excludes a 9.5p special dividend payable in June | ||||
